California Health Care Tax Proponents Go To The Ballot

The coalition that secured a $36 billion tax deal to pump more money into Medi-Cal wants to make it harder for future administrations to spend that revenue elsewhere.

The Coalition to Protect Access to Care — an amalgam of monied health care interests that includes representatives for doctors, hospitals, health plans and other key players — have filed paperwork to put a November 2024 ballot measure before voters that would make permanent a tax on health plans and funnel the revenue to certain parts of the health safety net. The measure, which was filed Wednesday with the attorney general and first reported here, would permanently authorize the tax.

“We need to make sure that this is permanent and will last beyond the next several years and become something that providers and patients can count on for decades to come,” said Dustin Corcoran, CEO of the California Medical Association and chair of the coalition behind the initiative. “We don’t know what future administrations may or may not do.”

The coalition has until March or April to collect 546,651 signatures to qualify for the November ballot, and they’re already a few weeks behind other initiatives. Another challenge: explaining a complex health care tax to voters.

Most of the deal was hammered out and settled in June as part of the budget. The tax on health plans, based on how many people they cover, had expired. The June agreement allowed California to renew the tax and use the proceeds to leverage billions more from the federal government.

Previously, all of the tax revenues from the MCO tax were gobbled up by the state’s general fund. But this year, nearly every health care advocate and elected official in the state demanded the money stay in the health care system, especially in Medi-Cal. The coalition pushed hard for the state to step in and raise the state’s reimbursement rates for doctors and hospitals to incentivize more clinicians to see the growing population of Medi-Cal enrollees.

The ballot initiative sets out a spending plan that hews fairly closely to the priorities laid out in June’s iteration of the tax, which expires in 2026. It assumes that the tax will bring in around $4.3 billion when it’s renewed in 2027.

That deal raised rates for primary care, OBGYN care and specialty mental health care and set aside money to cover such costs as emergency room physicians and ambulance services. The new ballot initiative preserves those priorities and adds more, like money for community health workers, specialty dental services, prescription drugs and some clinician and dentist loan repayments.

Putting these spending categories in a voter-approved law will provide stability to doctors who have been wary of investing in their Medi-Cal practices for fear of future cuts, said Jodi Hicks, CEO of Planned Parenthood Affiliates of California and the vice chair of the coalition.

“The health care landscape is always changing, but we know we always need access to care,” Hicks said. “This is an opportunity to create some stability and control where we can.”

But that stability comes with a downside. Any future changes would have to be approved by voters, making it harder for the state to update how it spends the revenue. California is dealing with that problem right now as lawmakers consider updating a 2004 voter-approved tax on incomes over $1 million to fund mental health services — a priority of Gov. Gavin Newsom’s. The governor’s proposed changes require a massive legislative and electoral effort to complete.

The coalition says it is trying to ensure some degree of flexibility for the state. It lays out broad spending rules, but the state will reassess which services can fall into which categories every few years when the tax is renewed.

Organizers plan to sell the initiative as a matter of access to care, Corcoran said. Even if a voter is not one of nearly 16 million Californians enrolled in Medi-Cal, he argued, everyone is affected by crowded emergency departments or closed hospitals. Each member of the coalition will contribute to the overall campaign’s $50 to $60 million budget.


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